In a groundbreaking development, Nigeria’s Dangote refinery has achieved a significant milestone by exporting its inaugural jet fuel cargo to Europe, according to a report from S&P Global Commodity Insights. This move signals the refinery’s rapid operational expansion and its capability to comply with European jet A1 standards.
The report states that British Petroleum (BP) is currently transporting 45,000 metric tonnes of jet fuel from the Dangote refinery to Rotterdam aboard the vessel Doric Breeze. This shipment marks the refinery’s debut in the European market, following a substantial 120,000-metric-tonne tender.
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According to the report, two sources confirmed that the Doric Breeze ship marked the inaugural BP cargo, loading 45,000 metric tonnes of jet fuel from Lekki on May 27th. Additionally, Cepsa, a Spanish refiner, has also secured a part of the tender and is expected to deliver supplies to the continent imminently, as stated by traders.
While neither BP nor Cepsa provided comments on their jet fuel purchases from the refinery, a representative from Dangote previously confirmed to S&P Global Commodity Insights that the refinery has complied with European jet A1 standards since the product first started being shipped within Africa in April.
This inaugural European shipment demonstrates the growing reach of products from the 650,000 barrels per day Dangote refinery as it rapidly ramps up operations and aims to reshape established West African trade flows. Prior to this, Dangote had exported six jet fuel/kerosene cargoes, with all material delivered to Senegal, Togo, or Ghana, starting on April 8th, according to Commodities at Sea (CAS) data. BP is also expected to continue supplying jet fuel to the West African market with products from the refinery, sources indicated.
European traders have cautioned that these fresh jet fuel flows could exacerbate existing market weakness as Nigerian supply enters an already highly saturated market. According to Platts assessments from Commodity Insights, CIF Northwest European jet fuel cargoes fetched a premium of $52 per metric tonnenene to the front-month ICE LSGO contract on May 29th, down $3.25 per metric tonnenene on the day and $11.25 per metric tonnenene on the week.
With ample supply weighing on the European market, the arbitrage window from the Persian Gulf was firmly shut. The spread between the CIF NWE June and July contracts moved into a contango of minus $1.50 per metric tonne on May 29th, reflecting prompt market weakness.
The refiner’s export portfolio could soon be reshaped as it pursues ambitious timelines for further unit ramp-ups. To date, Dangote has exported naphtha, fuel oil, and gasoil to markets in Europe, Africa, and Asia, though naphtha exports could soon be curtailed to prepare for gasoline production, as stated by a representative for Dangote on May 20th.
Dangote has aimed to produce ultra-low-sulphur diesel eligible for export to Europe by the third quarter, according to a representative in April. Commodity Insights analysts have maintained forecasts for gasoline supply from the refinery to begin no earlier than Q3, with the plant expected to reach steady-state utilisation around 2027.
In its steady state, Dangote is expected to yield 9% jet fuel, equating to around 45,000 barrels per day at 80% utilization. Early supplies from the refinery could make Nigeria a net jet fuel exporter for the first time by as early as the fourth quarter of 2024.
Furthermore, barring any last-minute change in plan, the $20 billion Dangote Oil Refinery is anticipated to be listed on the Nigerian Stock Exchange by December 2024, as stated by Aliko Dangote, the Chairman of the Dangote Group, on Tuesday.